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September 27, 2022

Ph real policy interest rate fifth best among 16 central banks

Investors were to benefit more investing in the Philippines and on its debt papers based on data obtained from 15 other central banks that include some of the largest and most advanced in the world.

According to the Bangko Sentral ng Pilipinas (BSP), creditor countries and their fund managers would get more from loans to the Philippines or from its debt and equity securities on the basis of its real policy interest rate of -1.0 percent.

At this level, the BSP said the country’s real policy interest rate is the fifth most attractive in a field of 16 central banks surveyed.

“The Philippines posted -1.0 percent and ranked fifth among the sample of 16 central banks. Its number is above the average real policy rate of -3.0 percent for the sample central banks,” BSP governor Benjemin E. Diokno said in a text message.

The real policy interest rate pertains to the nominal policy interest rate corrected for inflation and betrays the interest an investor gets for his money by investing in this case in any of the country’s debt or equity issues or in extending loans either to the government or the private sector.

Only four other countries have better real policy interest rate structures than the Philippines, which include Indonesia’s 1.44 percent, Japan’s 0.60 percent, Malaysia’s 0.55 percent and Hong Kong’s 0.70 percent.

“Preliminary data showed that Indonesia posted the highest real policy rate at 1.44 percent followed by Malaysia at -0.55 percent.

The Euro region posted -5.80 percent, the United Kingdom had -5.25 percent while the United States posted the lowest at -7.65 percent,” Diokno said.

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